Rates Remain the 800-Pound Gorilla

Goldman Sachs' one-delta desk warns that global rates are the primary market driver as yields break out and bond volatility rises. Concurrently, weak Chinese data and maxed-out systematic positioning create downside risks for global equities.

Key Takeaways

• 1.Systematic re-risking (CTA and Vol Control) is largely maxed out, leaving the market vulnerable to supply if prices break lower.
• 2.Chinese economic data (industrial production, retail sales) missed expectations significantly, indicating potential demand destruction.
• 3.The rates market remains the dominant market driver as yields break out globally and implied volatility in long bonds surges.

Table of Contents

• Technicals
• Energy
• China Data
• Risk

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